Discussion Paper Details
Please find the details for DP5251 in an easy to copy and paste format below:
Title: Bribery: Who Pays, Who Refuses, What are the Payoffs?
Author(s): Jennifer Hunt and Sonia Laszlo
Publication Date: September 2005
Keyword(s): corruption, governance and institutions
Programme Area(s): Institutions and Economic Performance, Labour Economics and Public Economics
Abstract: We provide a theoretical framework for understanding when an official angles for a bribe, when a client pays, and the payoffs to the client's decision. We test this framework using a new data set on bribery of Peruvian public officials by households. The theory predicts that bribery is more attractive to both parties when the client is richer, and we find empirically that both bribery incidence and value are increasing in household income. However, 65% of the relation between bribery incidence and income is explained by greater use of officials by high-income households, and by their use of more corrupt types of official. Compared to a client dealing with an honest official, a client who pays a bribe has a similar probability of concluding her business, while a client who refuses to bribe has a probability 16 percentage points lower. This indicates that service improvements in response to a bribe merely offset service reductions associated with angling for a bribe, and that clients refusing to bribe are punished. We use these and other results to argue that bribery is not a regressive tax.
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Hunt, J and Laszlo, S. 2005. 'Bribery: Who Pays, Who Refuses, What are the Payoffs?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=5251